Huntsman Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2018

4. DISCONTINUED OPERATIONS

In 2017, we separated the P&A Business and conducted both an IPO and a secondary offering of ordinary shares of Venator, formerly a wholly-owned subsidiary of Huntsman. On January 3, 2018, the underwriters purchased an additional 1,948,955 Venator ordinary shares pursuant to the exercise of the underwriters’ option to purchase additional shares. All of the ordinary shares offered in the IPO and the secondary offering were sold by Huntsman, and Venator did not receive any proceeds from the offerings. As of September 30, 2018, we retained approximately 53% ownership in Venator. We are actively marketing our retained ownership in Venator at a reasonable price. We have presented Venator as held for sale as a single asset and liability in our condensed consolidated balance sheets. During the third quarter of 2018, we recognized a net after tax valuation allowance of $270 million to adjust the carrying amounts of assets and liabilities held for sale and the amount of accumulated other comprehensive income recorded in equity related to Venator, which will be released upon sale, to the lower of cost or estimated fair value, less cost to sell.

In August 2017, we entered into a separation agreement, a transition services agreement (“TSA”), a tax matters agreement and an employee matters agreement with Venator to effect the Separation and provide a framework for a short term set of transition services. Pursuant to the TSA, we will, for a limited time following the Separation, provide Venator with certain services and functions that the parties have historically shared. We may also provide Venator with additional services that Venator and Huntsman may identify from time to time in the future. In general, the services began following the Separation and cover a period not expected to exceed 24 months; however, Venator may terminate individual services provided by us under the TSA early, as it becomes able to operate its business without such services.

The following table summarizes the major classes of assets and liabilities constituting assets and liabilities held for sale (dollars in millions):


	September 30,		December 31,
	2018		2017
Carrying amounts of major classes of assets held for sale:
Accounts receivable	$	398	$	380
Inventories		513		454
Other current assets		337		318
Property, plant and equipment, net		1,679		1,424
Deferred income taxes		118		158
Other noncurrent assets		141		146
Valuation allowance(2)		(270)		—
Total assets held for sale(1)	$	2,916	$	2,880
Carrying amounts of major classes of liabilities held for sale:
Accounts payable	$	375	$	385
Accrued liabilities		146		236
Other current liabilities		16		25
Long-term debt		744		746
Other noncurrent liabilities		283		300
Total liabilities held for sale(1)	$	1,564	$	1,692

The following table summarizes major classes of line items constituting pretax and after-tax (loss) income of discontinued operations (dollars in millions):

Huntsman Corporation


	Three months				Nine months
	ended				ended
	September 30,				September 30,
	2018		2017		2018		2017
Major classes of line items constituting pretax income of discontinued operations:
Trade sales, services and fees, net	$	539	$	589	$	1,796	$	1,700
Cost of goods sold		438		475		1,032		1,426
Other expense items, net that are not major		120		34		231		132
(Loss) income from discontinued operations before income taxes		(19)		80		533		142
Income tax benefit (expense)		52		(17)		(52)		(41)
Valuation allowance(2)		(270)		—		(270)		—
(Loss) income from discontinued operations, net of tax		(237)		63		211		101
Net income attributable to noncontrolling interests		(2)		(2)		(6)		(8)
Net (loss) income attributable to discontinued operations	$	(239)	$	61	$	205	$	93

Huntsman International


	Three months				Nine months
	ended				ended
	September 30,				September 30,
	2018		2017		2018		2017
Major classes of line items constituting pretax income of discontinued operations:
Trade sales, services and fees, net	$	539	$	589	$	1,796	$	1,700
Cost of goods sold		438		474		1,032		1,425
Other expense items, net that are not major		120		36		231		136
(Loss) income from discontinued operations before income taxes		(19)		79		533		139
Income tax benefit (expense)		52		(17)		(52)		(41)
Valuation allowance(2)		(270)		—		(270)		—
(Loss) income from discontinued operations, net of tax		(237)		62		211		98
Net income attributable to noncontrolling interests		(2)		(2)		(6)		(8)
Net (loss) income attributable to discontinued operations	$	(239)	$	60	$	205	$	90

(1)

We have presented Venator as held for sale as a single asset and liability in our condensed consolidated balance sheets. We are actively marketing our retained ownership in Venator at a reasonable price.

(2)

During the third quarter of 2018, we recognized a net after tax valuation allowance of $270 million to adjust the net carrying amount of Venator to the lower of cost or estimated fair value, less cost to sell. The fair value less cost to sell utilized the observable stock price of Venator plus an estimated control premium less estimated selling costs (Level 3).